Mozambique's pathway to recovery

Jul 20, 2004 02:00 AM

A $ 1.2 bn natural gas project led by South Africa's petrochemical giant Sasol in neighbouring Mozambique has fuelled
hopes for the economic recovery of the country's once-vibrant southern hub.
Sasol, in partnership with the Mozambique Hydrocarbon Company (ENH), has built an 856 km pipeline to transport gas
from Temane, about 700 km north of the southern seaside capital Maputo, to its fuel complex in Secunda across the
border. The Temane gas project has just spawned a new firm -- the Matola Gas Company (MGC), a venture between South
Africa's Gigajoule and several Mozambican firms including ENH.

All this is a boon for Mozambique, a former Portuguese colony which gained independence in 1975 but was devastated by
a 16-year civil war that ended in 1992. Close to 55 % of Mozambicans live below the poverty line.
MGC will build a pipeline to supply natural gas to the Mozambican industrial city of Matola, which will be branched
off from the main pipeline linking the Temane gas fields to the South African town of Secunda.
"We are investing some $ 26 mm to build the pipeline from the border town of Ressano Garcia to Matola, where we
already signed contracts with eight customers including the Mozal aluminium smelter," Johan de Vos, managing director
of Gigajoule, told.

Mozal, a two billion-dollar project led by Britain's Billiton, Japan's Mitsubishi and South Africa's Industrial
Development Corporation (IDC) is at the heart of a major free zone industrial park close to the port of Maputo. De
Vos said the company would have the entire infrastructure in place by next May, adding that the gas would be both for
industrial and domestic use as well as to run cars.
"Our project revives hopes that industries that are currently closed in the area could now be attractive to potential
investors," de Vos said. Some major companies in the area have shut down after going bankrupt from high operating
costs such as Texlon, a former state-run textile firm, and glass producer Vidreira de Mozambique.

With the Matola gas project, Mozambique also hopes to cut its annual fuel imports by about $ 80 mm, according to a
government statement. Horacio Dombo, head of the industrial free zone division of the Mozambican investment promotion
agency CPI, said: "the gas project will be an incentive for the development of new projects as well as existing ones
taking into account that gas, contrary oil, is not to be imported." Mozambican officials say gas will be cheaper
thereby slashing production costs.
"It will be a great catalyst for investments," he said.

Labour Minister Mario Sevene said the gas project would help Mozambique tackle unemployment, which is between 21 %
and possibly as high as 50 %.
"There is no doubt that this project will have a great impact in the generation of employment including
self-employment as the gas would also be available domestically not only for cooking but also for small workshops,"
Sevene told.